Chris Bailey, European Strategist for Raymond James agreed adding that both sterling and the euro had moved too far, especially against the dollar.
Rathbone’s Bryn Jones, said the comments implied that May does not want to upset the apple cart just yet, happy instead to play a game of cat and mouse with markets.
“I suspect we will continue to ebb and flow on FX and rates moves all year as we hear more on this subject,” he said.
This is similar to the views of Joshua Mahony, market analyst at IG who said that it is entirely plausible to argue that pound’s declines have ceased for now and, given that currency movements are the major driving force behind markets, this could spell trouble for the FTSE 100.
But, he added: “With the speech out of the way, and the Article 50 deadline still a few weeks off, it is likely that Brexit will drop off the radar for the time being. Instead, US earnings season and the new administration will take precedence.”
As was shown time and time again in 2016, markets have an enormous capacity for adaption and a relatively short attention span. Tuesday’s speech is but one small step on what remains a very long, uneven road.
For now, attention will turn once more to the US, but as Henderson’s multi-asset team said: The enormity of the task facing the UK government should not be underestimated. With the French and German elections dominating political attention on the Continent for the next six months and an estimated further six months required to ratify any eventual deal, the UK has around 12 months to negotiate the most significant trade deal of the last 50 years.”
